Page 4. Towards a national exchange, 1950–1984

Growth in 1950s and 1960s

The National government elected in 1949 repealed war regulations, introduced a more liberal import licence scheme, and removed the 33⅓% tax on income from stock holdings. These changes breathed life into stagnant exchanges. Local-body loans increased in size and frequency, and a plethora of new public companies emerged in the 1950s, reflecting booming export prices for the country’s agricultural produce. The exchanges expanded, with seat prices ranging between £600 and £800. However, New Zealand’s exchanges still lagged behind stock exchanges overseas. Continued state control of the economy and high company and personal tax rates restricted growth.

Through the 1950s and 1960s small numbers of large investors were replaced by large numbers of small investors. They were not interested in speculative gambling but wanted shares in well-established companies for long-term saving. Along with this egalitarianism came an increase in women investors.

Share the wealth

In the early 1960s share clubs attracted many to the stock market. One of the first was the Friendly Investment Club in Auckland. Its members included a truck driver, mechanic, solicitor, typist, hairdresser, bank clerk, shop worker, journalist and a number of housewives. They met monthly in a restaurant, studied prospectuses and handed over their £5 for collectively decided investments.

In 1960 some Auckland businessmen formed a unit trust, a new term for the investment trusts of the 1930s. In that same year an act was passed requiring unit trusts to be public companies and its trustees to have held reputable positions in organisations approved by the Minister of Justice. Such ventures have been an integral component of New Zealand sharebroking ever since.

Call-overs to chalkies

As demand increased, there was criticism of the call-over or auction system of trading. It was time-consuming and cumbersome, and created delays in investors receiving their share scrip. Brokers fell behind in their paper work. In 1962 the Wellington Exchange replaced the call-overs with a post-trading system. All the other exchanges had followed suit by 1970. At one end of the trading room a large board, or ‘post’, listed all the active stocks. On a raised platform women clerks, or ‘chalkies’, with chalk and duster in hand, moved along rubbing out the old and writing the new stock price. This was determined by brokers gathered around telephones and shouting out quotes.

Young radical

Six times between 1967 and 1969, the exchanges denied young entrepreneur Ron Brierley the right to list his company, Brierley Investments, on the exchange. He was believed to be a radical, whose habit of buying into sleepy businesses and transforming them would destabilise trading and confound the market. He made it in 1970 by just one vote. Brierley went on to become one of the richest men in New Zealand.

The new system was a fast and accurate means of determining a true market value. Company announcements likely to affect share price were read out as soon as they were received. Many who worked the floor were not brokers but clerks, aggressive and quick-thinking, working to win a seat on their exchange. Post-trading exchanges were open to the public, and this gave impetus to a burgeoning share club phenomenon, which peaked in the 1980s.

National exchange

During the 1970s pressures came for a national exchange. One reason for this was because with telex services and telephones on the trading floor, many brokers conducted business nationally and sometimes overseas. Another reason was that centralisation had already begun: exchanges sold stocks from other regions and stockbroking had national rules, a national council and executive, national sales reporting and a national disciplinary council.

In 1976 the Stock Association of New Zealand appointed a sub-committee to investigate setting up a national exchange. Two years later the Christchurch and Invercargill exchanges merged.

This merger led to the national New Zealand Stock Exchange being set up in 1983. The Stock Exchange Council replaced the Stock Exchange Association as the profession’s elected ruling body. Under the new organisation, brokers and operators still worked on their local floor and elected delegates to the council, but the national office now directed all operations.